Zimbabwe president doubles price of gas as fuel crisis bites

In a press conference Saturday night, President Emmerson Mnangagwa said the increase in the state-controlled price of fuel should ease the shortages that have gripped the country in recent weeks.AP | January 13, 2019, 19:37 IST

Harare: Zimbabwe's president has more than doubled the price of gasoline, hoping the increase will end severe shortages that are fueling public anger even as he departs on a foreign trip to Russia and other countries in search of investment.

In a press conference Saturday night, President Emmerson Mnangagwa said the increase in the state-controlled price of fuel should ease the shortages that have gripped the country in recent weeks. The president left Zimbabwe on Sunday on a trip that will end with his attendance at the World Economic Forum meeting in Davos, Switzerland, angering critics who say he should stay at home to deal with the crisis.

The gas shortages highlight that this southern African country is battling its worst economic crisis in a decade due to a severe shortage of foreign currency.

The lack of fuel means that police walk for kilometers (miles) with handcuffed suspects because their vehicles are grounded. Ambulances, school buses, public transport vehicles and garbage trucks spend days waiting in line for diesel and petrol.

Some motorists camp out at fuel stations where pumps are dry for days. Others simply park their vehicles at the nearest gas station in hopes of being in a prime spot when fuel eventually becomes available.

In a stark contrast that is also stoking public anger, a video on social media shows a long line of cars waiting for gasoline along a roadside as what appears to be Mnangagwa's presidential convoy, escorted by motorcyles, zips past the desperate motorists.

The fuel crisis is just part of Zimbabwe's overarching economic decline under President Emmerson Mnangagwa, who briefly inspired hope after taking over from his mentor, longtime ruler Robert Mugabe with the help of the military in November 2017.

Zimbabwe's economy, which was already struggling when Mnangagwa took over, has dramatically tanked since he narrowly won disputed elections in July last year. Inflation rose to 31 percent in November last year, the highest since 2009, while foreign currency shortages could force some of the few factories still operating to close "in a month or so," said Sifelani Jabangwe, the president of the Confederation of Zimbabwe Industries, the representative body for private industry.

"The country is grinding to a halt," he said at a meeting on the economy on Thursday.

The drastic fuel shortage sums up Zimbabwe's dire economic situation.

"It has been a week now and still nothing," said Alyvene Moyo, at a fuel line snaking for several kilometers (miles) in the capital, Harare. A pillow and some blankets lay on his passenger seat and family members take turns sleeping in the car, he said.

"This vehicle is our life. We are already starving and I cannot pay school fees because of these shortages," he said of his sedan, which he has turned into an illegal public transport vehicle since losing his job at a hardware store last year.

No one seems spared. At another service station, an army truck drove straight to the front of a long line, drawing murmurs of discontent from waiting motorists.

At gas stations where petrol and diesel become available, the riot police keep order, but they get perks: police trucks got to refuel ahead of other motorists. In normal times, security agencies refuel from their own pumps at the bases.

Before Mnangagwa's price increase, $10 of money by electronic transfer could fetch petrol worth $35 in cash, thanks to a government subsidy aimed at maintaining artificial parity between dollars in cash and funds available by electronic transfer.

Zimbabwe abandoned its own currency in 2009 after hyperinflation reached 500 billion percent, according to the International Monetary Fund. The U.S dollar has dominated daily transactions since then.

But due to widespread shortages of dollars, most people must now use a government-issued surrogate currency called bond notes, which are supposed to be equal to a U.S. dollar, as well as electronic money. Both are quickly devaluing against the dollar on the black market.

Some businesses such as pharmacies are now only accepting U.S. dollars in cash. In the fuel sector where the government controls prices, fuel companies are forced to accept bond notes and electronic money for petrol and diesel at the official exchange rate. The government then provides the firms with dollars to import the products, but the government has not allocated firms adequate funds to import sufficient fuel for the country, leading to the shortages.

Analysts said the weekend price increase was expected and warned it could lead to a new round of price increases of food items and other services.

"If you look at the black market rates, Zimbabwe had the cheapest fuel in Africa. A liter cost between 40 to 45 cents," said Takunda Mugaga, an economist and chief executive of the Zimbabwe National Chamber of Commerce.

"Such pricing distortions inspired by an overvalued exchange rate are very unsustainable, especially when the government is broke," said Mugaga, adding that many workers spent most of their productive time waiting in line for fuel.

Announcing the increase, Mnangagwa said the government "will not allow businesses to trigger a new round of price increases." He attributed the shortages to "the growing economy . and rampant illegal currency fuel trading activities." Mnangagwa claimed "certain elements" wanted to use the fuel shortages to cause unrest. Mnangagwa's attempts to control the economy, rather than allow market forces to determine prices, is one of the causes of Zimbabwe's economic woes, say economists.

Enterprising Zimbabweans have taken advantage of the lengthy lines. Vendors make brisk business selling food and other items to motorists and others have opened mini-car wash ventures at the queues.

At times, the frustration boils over to violent flare-ups between motorists. At one gas station in Harare, police fired tear gas to disperse fighting motorists, while fuel attendants are often targets of attacks by motorists who accuse them of taking bribes to allow some people to jump the line.

Public anger is swelling and fuel lines have become public spaces where open anti-government sentiment is voiced despite the fact that people are often arrested for criticizing the president.

Mocking Mnangagwa's campaign slogan: "Zimbabwe is open for business," one grounded motorist drew laughter from others in line by shouting: "Zimbabwe is closed for business!"